July 2016

90% of the email pitches I have gotten this year lament increased uncertainty or volatility in the markets. That leaves me scratching my head. The idea that this year’s volatility has been problematic is laughable. The VIX is at 12.16 (as of 7/29/2016), which is actually abnormally low. This measure of stock market volatility generally spikes during market selloffs or in the wake of macroeconomic events that traders perceive to be negative. It was over 40 during the drawdown in the third quarter of 2015 and hit about 28 during the lows in February of this year. After the Brexit vote, it jumped to almost 26. The VIX averages around 20. So if we’re using the VIX as a proxy for uncertainty, the world is actually about as certain as it ever gets about the future. The VIX is not a perfect proxy for uncertainty, though. What about headlines? Brexit, the Middle…